Consistent Textile Industries, Dallas, NC; Notice of Negative Determination on Reconsideration

On November 29, 2007, the Department issued an Affirmative Determination Regarding Application for Reconsideration for the workers and former workers of Consistent Textiles Industries, Dallas, North Carolina (the subject firm). The Department's Notice of affirmative determination was published in the Federal Register on December 11, 2007 (72 FR 70344).

The initial determination was based on the Department's findings that the subject firm did not separate or threaten to separate a significant number or proportion of workers (at least three workers with a workforce of fewer than 50 workers, or five percent of the workers with a workforce of 50 or more, or 50 workers) as required by section 222 of the Trade Act of 1974.

The company-filed petition for Trade Adjustment Assistance (TAA) and Alternative Trade Adjustment Assistance (ATAA) alleges that the worker group works at a firm that has increased imports of like or directly competitive articles, has shifted production of the article to a foreign country, and has customers that have increased imports from another country.

In the request for reconsideration, a company official states that three workers were separated from the subject firm.

In order to apply for TAA, petitioners must meet the group eligibility requirements for directly-impacted workers under section 222(a) the Trade Act of 1974, as amended. The requirements can be satisfied in either one of two ways.

Under Section (a)(2)(A), the following must be satisfied:

A. A significant number or proportion of the workers in such workers' firm, or an appropriate subdivision of the firm, have become totally or partially separated, or are threatened to become totally or partially separated; and

B. The sales or production, or both, of such firm or subdivision have decreased absolutely; and

C. Increased imports of articles like or directly competitive with articles produced by such firm or subdivision have contributed importantly to such workers' separation or threat of separation and to the decline in sales or production of such firm or subdivision;

Under Section (a)(2)(B), the following must be satisfied:

A. A significant number or proportion of the workers in such workers' firm, or an appropriate subdivision of the firm, have become totally or partially separated, or are threatened to become totally or partially separated; and

B. There has been a shift in production by such workers' firm or subdivision to a foreign country of articles like or directly competitive with articles which are produced by such firm or subdivision; and

C. One of the following must be satisfied:

1. The country to which the workers' firm has shifted production of the articles is a party to a free trade agreement with the United States; or

2. The country to which the workers' firm has shifted production of the articles is a beneficiary country under the Andean Trade Preference Act, African Growth and Opportunity Act, or the Caribbean Basin Economic Recovery Act; or

3. There has been or is likely to be an increase in imports of articles that are like or directly competitive with articles which are or were produced by such firm or subdivision.

During the reconsideration investigation, the Department confirmed that the subject firm separated three of its four workers. Accordingly, the Department determines that section (a)(2)(A)(A) and section (a)(2)(B)(A) were met.

A review of previously-submitted information confirmed that subject firm sales decreased in 2006 from 2005 levels, and decreased during January through October 2007 as compared to the corresponding period the prior year. Accordingly, the Department determines that section (a)(2)(A)(B) was met.

In order to determine that the subject workers meet the TAA group eligibility requirements, the Department must also find that either section (a)(2)(A)(C) was met or section (a)(2)(B)(B) and section (a)(2)(B)(C) were met.

The analysis of Section (a)(2)(A)(C) begins with identifying the “articles produced by such firm or subdivision,” continues with a finding of “increased imports of articles like or directly competitive with articles produced by such firm,” and concludes with the determination that increased imports “have contributed importantly” to the workers' separation or threat of separation and to the decline in subject firm sales or production.

The company-filed petition identified no article produced at the subject firm [Question—What (if any) articles are produced at subject firm? Answer—Just Sales, Question—If none are produced, what do workers do? Answer—Sales]. When the Department contacted the subject firm's major declining customer during the reconsideration investigation, the customer stated that it had no records of purchases of machine parts from the subject firm. Rather, all of the subject firm orders are for repair work on the customer's machines. Further, a company official stated that the machine parts produced were “used for replacement or repair” of textile machines.

The Department has consistently determined that repair work is a service and that items created incidental to provision of a service are not articles for purposes of the Trade Act. As such, the Department determines that no article was produced by the subject firm, and that the subject workers cannot be considered import impacted or affected by a shift of production abroad, and cannot be certified as eligible to apply for worker adjustment assistance under the Trade Act.

Even if the subject firm does produce an article, for purposes of the Trade Act, the petitioning workers would not meet the group eligibility requirements for directly-impacted workers under section 222(a) the Trade Act of 1974, as amended.

The workers allege that they produce machine parts for textile machines. As such, a certification would be based on either a shift of production of machine parts to a foreign country or a determination that increased imports of articles like or directly competitive with the machine parts produced by the subject firm contributed importantly to workers' separation and declines in subject firm sales or production.

According to additional information obtained during the reconsideration investigation, the subject firm ceased machine part production in November 2007, did not shift production of machine parts to a foreign country, and did not increase its imports of machine parts like or directly competitive with those produced by workers at the subject firm.

Because there was no shift of production, as required by Section (a)(2)(B)(B), the petitioning workers can be certified eligible to apply for TAA only if the Department finds that there were “increased imports of articles like or directly competitive with articles produced by such firm,” and that increased imports “have contributed importantly” to the workers” separations and to the decline in subject firm sales or production.

Since the subject firm did not increase its imports of machine parts or articles like or directly competitive with those produced by workers at the subject firm, the Department conducted a survey to determine whether the subject firm's major declining customers had increased their imports of machine parts or articles like or directly competitive with those produced by workers at the subject firm. None of the customers reported increased imports of articles like or directly competitive with the machine parts produced by workers at the subject firm.

Absent a finding of increased imports, the Department cannot determine that increased imports contributed importantly to the workers' separations. Accordingly, the Department determines that section (a)(2)(A)(C) was not met.

Although the request for reconsideration did not allege that the subject workers were adversely affected as secondary workers (workers of a firm that supply component parts to a TAA-certified company or finished or assembled for a TAA-certified company), the Department expanded the reconsideration investigation to determine whether they would be eligible to apply for TAA on this basis. Such a certification, under section 223(b)(2), must be based in the certification of a primary firm.

The reconsideration investigation revealed that although several of the subject firm's customers are TAA-certified, the article produced by the subject workers (machine parts) are not a component part of the article produced by the workers eligible to apply for TAA (textiles). As such, the Department determines that section 223(b)(2) has not been met.

In order for the Department to issue a certification of eligibility to apply for Alternative Trade Adjustment Assistance (ATAA), the subject worker group must be certified eligible to apply for Trade Adjustment Assistance (TAA). Since the subject workers are denied eligibility to apply for TAA, the workers cannot be certified eligible for ATAA.

Conclusion

After careful review of the new and addition information obtained during the reconsideration investigation, I affirm the original notice of negative determination of eligibility to apply for worker adjustment assistance for workers and former workers of Consistent Textiles Industries, Dallas, North Carolina.